During the Capital Raising to institutional investors, Petra capital (who were responsible for the CR), put together a term sheet that had forecast earnings for the next few years. (I didn't participate in this, but one of the investors who did was nice enough to send me a copy of the term sheet).
More specifically, the term sheet had EPS figures (using 'normalised' NPAT) of 17.7cps for FY16 and 20cps for FY17 (please keep in mind these are just forecasts). Using those figures and applying a very crude valuation of 12*earnings, you'd have a SP of $2.40 in FY17... that's including the dividend @ a payout ratio of 100%...
So in effect you'd get:
- Dividends of 17.7 + 20cps fully franked = 37.7cps + franking credits (Gross 53.8cps). This will likely be impacted by one off costs, so lets say 40cps gross.
- Valuation of $2.40 per share - approx. 60cps increase from today
If the 'valuation gap' does close (using a very crude valuation tool), you'll see $1 return in 2 years from a $1.78 purchase price. I don't even need to calculate the return on that.
Please keep in mind this is all predicated on the term sheet forecasts and a very rough valuation technique (which probably understates the true value, but that's for others to decide).
I hope that makes sense...
DDR Price at posting:
$1.78 Sentiment: Hold Disclosure: Held
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